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The new intelligence law, signed by President Bush in December 2004, includes a plan to make it faster and simpler for federal contractors to obtain security clearances to work on government projects.

Under the Intelligence Reform and Terrorism Prevention Act of 2004, agency officials can accept contractors' clearances issued by other agencies, ending a complicated and time-consuming system. The law outlines a schedule that requires that by 2006, officials complete most clearances within 120 days and even faster in the following years.

It is the first effort to speed the clearance approval process since the Sept. 11, 2001, terrorist attacks made clearances a requirement for most contractors who work on government security projects.

The law also calls for a lead agency to manage most clearances and establish standards to ease the process. Although an agency has not yet been designated, the Office of Personnel Management likely will get the job because OPM officials already handle most clearance investigations for civilian and military applicants.

Contractors have complained for years that investigating agencies such as the FBI and Defense Department are slow to complete clearances. The backlog has exceeded 500,000 applications, according to

experts.

The difficulty in obtaining clearances often leads to excessive costs for the federal government, said Rep. Tom Davis (R-Va.), who spoke about the changes at a Jan. 25 conference sponsored by the Information Technology Association of America.

"It is a huge crisis for firms out here," Davis said. "It is a crisis for taxpayers. Someone with a clearance can almost name their price."

In a recent case, an FBI agent called Davis' office seeking help because he was transferring to DOD. Although he had a clearance from the FBI, DOD officials would not accept it, said John Cuaderes, senior professional staff member of the House Government Reform Committee, who also spoke at the session.

At the gathering of 150 industry executives, Cuaderes said the management of security clearances is broken, and the new law is intended to fix the system's inefficiencies.

The law establishes a director of national intelligence as the president's chief adviser on intelligence. The director has budgetary and monitoring authority over foreign and domestic intelligence activities. The law also calls for a national counterterrorism center, through which terrorism information will be channeled and whose director will report to the president on counterterrorism planning.

Congress mandated the deal in the Defense Authorization bill of 2004, and the transition should be completed this month. OPM officials have also been using six private companies to handle background investigations to help clear the backlog.

Critics of the government's clearance process welcome the changes. In a new report, Government Accountability Office auditors said the Pentagon's clearance backlog creates risks.

"Such delays increase national security risks, delay the start of classified work, hamper employers from hiring the best qualified workers and increase the government's cost of national security-related contracts," GAO auditors wrote in the report.

The report states that 270,000 investigative and 90,000 adjudicative cases were in DOD's backlog.

Easy clearances

The Intelligence Reform and Terrorism Prevention Act of 2004 includes provisions that would make security clearances acceptable at all agencies.

Here are several of the new rules:

* Agencies will accept investigations and determinations performed by other agencies.

* Investigations are transferable to other authorized investigative agencies.

* Additional investigative requirements, other than a polygraph, require an oversight entity's approval.

* Investigations for security clearance purposes are prohibited when a current investigation or clearance of equal level already exists.